What To Do With My Tax Return?

Well now that I've filed my tax return, the next logical step in my thought process is what should I do with the money I'm going to get back soon?  Buy a new TV, video games, maybe some furniture, do some remodeling, new wardrobe for the wife?  There are so many options out there when you're about to receive a large sum of money, and so many companies out there ready to take advantage of the weak-willed.  There are companies ready to give you a loan today based on your expected return, in case you can't wait the 2 weeks for the direct deposit or 3-4 weeks for the check to arrive.  Car dealerships start offering incentives to double your tax return if you put it towards a down payment on a new car.  The best piece of advise I can give you is to plan out what to do with the money you're going to receive from your tax return (if you're due a refund) BEFORE you actually file.  That way you will be less tempted (not completely free, we all have the little devil on our shoulder sometime) to watch that money go away.  In the game of retirement, controlling frivolous spending is as important, if not more important, than making good decisions about investments.  If you're someone that struggles with money discipline, like myself, then I challenge you to decide what to do with your tax refund before filing for your taxes, and sticking with that plan once you actually have the money in your hand.  If you can accomplish that goal, you're one step closer to achieving your financial dreams.

Good Luck!

Jacob

The Wonderful World of Taxes

So I just finished filing my 2010 Tax Return, and am due to get a significant return on my taxes.  There's not really anything I can do to reduce my tax liability during the year because in sales, your commissions are withheld at the highest tax rate.  I've never heard a sufficient answer from any company where I've worked as to why this must be the case, but I suppose it is one way that the IRS can use your money for up to a year until you file your return to get it back.

One of the main reasons why I'm trying to get out of the Rat Race and retire is so I don't have to pay as much taxes.  Percentage wise, the rich have a much smaller tax liability than the poor, and that's because they literally wrote the book on tax law.  I've included a link here to an article that compares 4 of the most common tax prep solutions available, so for those who haven't started filing their taxes and plan to do it themselves, it would be worth a look.

Good luck to everyone getting your hard earned money back from the IRS this tax season!  If you're one of the few that actually gets close to even on their tax return, or winds up owing less than $500, I tip my hat to you.

Jacob